Home loans are crucial for people who want to buy a property. These loans include substantial funds, so lending institutions conduct rigorous verifications and inspections to ensure on-time loan repayments. Hence, home loan applicants should submit several property documents to get loan approval and fulfil their dream of owning a house.
Knowing which property documents for a home loan are required is imperative to get loan approval and avoid rejection. Here’s a quick checklist.
1. Conveyance Deed
Also known as a sale or final deed, a conveyance deed is significant proof of property ownership. Do not confuse it with a sale agreement, which is a promise of property transfer. A conveyance deed includes crucial information about the transaction, including both parties’ personal details, a detailed property description, the sale amount, an advance payment, the payment medium, the time frame for the property transfer, the possession date, and the buyer’s authority to sell the property.
While applying for housing finance, the borrower should submit the conveyance deed, without which they cannot sell or purchase a property or construct a house on a plot. The loan company returns the conveyance deed after the borrower repays the loan in full.
2. Agreement for Sale
Also known as the sale agreement, it is an important property document that housing loan providers demand. It is a written agreement between the seller and the buyer to transfer a property’s ownership. It consists of all the terms and conditions related to the transaction. However, the sale agreement is like a promise for the property’s sale and does not give property rights to any party. The details in the sale agreement include both parties’ details, the property’s location and description, the payment schedule, the construction timeline, penalty clauses, and the signatures of witnesses.
3. Khata Certificate
When an individual buys a property with a housing loan, the lending company wants to check if they have the new property’s registration. For that purpose, a Khata certificate becomes a crucial property document that gives proof that the property is registered with the local municipal records and that the builder constructed it according to the approved plan for construction. The borrower will also require this document while transferring the ownership after repaying the loan.
4. Possession Letter
The borrowers should present the original possession letter to the loan company while applying for a Home Loan. It is a written indication of the property transfer on the mentioned date.
5. Payment Receipts
The borrowers should collect payment receipts from the developer or builder. Buyers of resale properties must get copies of the original payment receipts from the builder to the first homeowners.
6. NOC from the Housing Society or Builder
Known as the No Objection Certificate (NOC), you will need this document from your Builder or Housing Society from where you are purchasing the home. It will ensure that there is no further objection from the builder or apartment association regarding your home.
7. Occupancy Certificate
An occupancy certificate is one of the most important property documents for a home loan that verifies the completion of home construction. After this, the lender inspects the property to verify its construction and approves the loan. Simply put, the occupancy certificate ensures that the house is ready for possession.
8. MODT (Memorandum for Deposit of Title Deed)
While applying for a Home Loan, a MODT is an undertaking that borrowers should provide to state that they have submitted the property documents with their finance company. Some lending institutions require the borrowers to submit this document after registering it with the loan agreement and paying the stamp duty charges. If the borrower fails to repay the loan, the lenders can use this document to recover their money. Upon full repayment, the lending institution will cancel the MODT and issue a Deed of Receipt.
9. Property Map
Housing loan lenders ask for a copy of the property map approved by the concerned statutory body. It approves that the property construction is legal and completed per the rules and regulations.
10. Allotment Letter
The borrower should collect an allotment letter from the property’s housing society or builder and submit it to the lender. It contains important information about the property during the transfer from the seller to the buyer, including the down payment, remaining amount, and other terms. Loan companies sanction the loan amount after evaluating this document. However, remember that this document is available to the first owner only. Subsequent owners get a copy of the original allotment letter from the previous owner.
Other than these, the power of attorney, construction agreement, encumbrance certificate, tax receipts, own contribution receipts, and bank statements are other property documents for a home loan. While applying for a home loan, keep these documents ready to streamline and accelerate the loan process. Double-check before submitting, as the loan approval and other terms and conditions will largely depend on the authenticity of these documents.